nep-tid New Economics Papers
on Technology and Industrial Dynamics
Issue of 2017‒11‒05
ten papers chosen by
Fulvio Castellacci
Universitetet i Oslo

  1. Internalizing Global Value Chains: A Firm-Level Analysis By Laura Alfaro; Paul Antràs; Davin Chor; Paola Conconi
  2. Do Firms Mitigate or Magnify Capital Misallocation? Evidence from Planet-Level Data By Matthias Kehrig; Nicolas Vincent
  3. Regional diversification and green employment in US Metropolitan Areas By Nicol˜ Barbieri, Davide Consoli; Davide Consoli
  4. Capital Misallocation and Financial Development: A Sector-Level Analysis By Daniela Marconi; Christian Upper
  5. Driven up the wall? Role of environmental regulation in innovation along the automotive global value chain. By Suchita Srinivasan
  6. Human Resource Management in Professional Service Firms: a Systematic Literature Review By Sokolov, D.; Zavyalova, E.
  7. The determinants of firms’ convergence to the European TFP frontier By Dolores Añón Higón; Juan A. Mañez; María E. Rochina-Barrachina; Amparo Sanchis; Juan A. Sanchis-Llopis
  8. Growing Productivity without Growing Wages: The Micro-Level Anatomy of the Aggregate Labor Share Decline By Matthias Kehrig; Nicolas Vincent
  9. Technological catching-up and growth convergence among US industries By Jean-Philippe Boussemart; Hervé Leleu; Edward Mensah; Karina Shitikova
  10. The determinants of international patenting decisions of Spanish firms By Pilar Beneito; María E. Rochina-Barrachina; Amparo Sanchis

  1. By: Laura Alfaro; Paul Antràs; Davin Chor; Paola Conconi
    Abstract: In recent decades, advances in information and communication technology and falling trade barriers have led firms to retain within their boundaries and in their domestic economies only a subset of their production stages. A key decision facing firms worldwide is the extent of control to exert over the different segments of their production processes. We describe a property-rights model of firm boundary choices along the value chain that generalizes Antràs and Chor (2013). To assess the evidence, we construct firm-level measures of the upstreamness of integrated and non-integrated inputs by combining information on the production activities of firms operating in more than 100 countries with Input-Output tables. In line with the model's predictions, we find that whether a firm integrates upstream or downstream suppliers depends crucially on the elasticity of demand for its final product. Moreover, a firm's propensity to integrate a given stage of the value chain is shaped by the relative contractibility of the stages located upstream versus downstream from that stage, as well as by the firm's productivity. Our results suggest that contractual frictions play an important role in shaping the integration choices of firms around the world.
    Keywords: global value chains, sequential production, incomplete contracts
    JEL: F14 F23 D23 L20
    Date: 2017–10
  2. By: Matthias Kehrig; Nicolas Vincent
    Abstract: Almost two thirds of the cross-plant dispersion in marginal revenue products of capital occurs across plants within the same firm rather than between firms. Even though firms allocate invest- ment very differently across their plants, they do not equalize marginal revenue products across their plants. We reconcile these findings in a model of multi-plant firms, physical adjustment costs and credit constraints. Credit constrained multi-plant firms can utilize internal capital markets by concentrating internal funds on investment projects in only a few of their plants in a given period and rotating funds to another set of plants in the future. The resulting increase in within-firm dispersion of marginal revenue products of capital is hence not a symptom of misallocation within the firm, but rather actions taken by the firm to mitigate external credit constraints and adjustment costs of capital. Economies with multi-plant firms produce more aggregate output despite higher dispersion in marginal revenue products of capital compared to economies with single-plant firms. Because emerging economies are predominantly populated by single-plant firms, the gains from reducing their distortions to the level of developed are larger than previously thought.
    Keywords: misallocation, productivity dispersion, multi-plants firms, internal capital markets
    JEL: E20 G30
    Date: 2017
  3. By: Nicol˜ Barbieri, Davide Consoli; Davide Consoli
    Abstract: This paper analyses whether and to what extent regional diversification enables or thwarts green employment in US Metropolitan Areas (MAs) between 2006 and 2014. The recent debate on related and unrelated variety provides the conceptual frame for our study. The main findings are two. First, unrelated diversification is a positive and significant predictor of green employment growth. Second, this effect differs across occupational categories: while unrelated variety at industry level favours the growth of mid- to low-skill green jobs, unrelated variety at occupational level favours high- to mid-skill green jobs. Overall, local related diversification has very little impact.
    Keywords: Green employment, Variety, Diversifications
    Date: 2017–10
  4. By: Daniela Marconi (Bank of Italy); Christian Upper (Bank for International Settlements)
    Abstract: This study investigates how financial development affects capital allocation across industries in a panel of countries at different stages of development (China, India, Mexico, Korea, Japan and the US) over the period 1980-2014. Following the approach proposed by Chari et al (2007) and Aoki (2012), we compute wedges for capital and labour inputs for 26 industrial sectors in the six countries and add them up to economy-wide measures of capital and labour misallocation. We find that more developed financial systems allocate capital investment more efficiently than less developed ones. If financial development is low, faster capital accumulation is associated with a worsening of allocative efficiency. This effect reverses for higher levels of financial development. Sectors with high R&D expenditures or high capital investment benefit most from financial development. These effects are not only statistically significant, they are also large in economic terms.
    Keywords: factor allocation, total factor productivity, financial development.
    JEL: E22 E23 O16 O47
    Date: 2017–10
  5. By: Suchita Srinivasan
    Abstract: Are environmental regulations imposed on downstream firms effective in spurring innovation in clean technologies by upstream firms? We use a novel firm-level dataset of global scope to study whether environmental regulations have percolated up the automotive global value chain, and led to innovation (measured by patenting in abatement technologies) by suppliers at different levels of the chain. Using a Poisson estimation methodology, we find that suppliers worldwide have responded to increasingly stringent emission standards imposed on automobile manufacturers (also known as original equipment manufacturers, or OEMs) by undertaking more innovation in clean abatement technologies; additionally, we find that the smaller the gap between the average environmental regulation suppliers face from the OEMs,and that in the country where the firm is located, the more the firm innovates. In addition, we provide evidence of a spread of these positive effects of regulation on innovation, with suppliers at different upstream levels responding positively to the downstream standards. This paper has important policy implications for the design of environmental policy instruments to induce innovation in clean technologies by firms along the value chain.
    Keywords: Environmental Regulation; Global Value Chains; Patents; Automotive Industry
    JEL: Q55 O31 Q58 F23
    Date: 2017–06–14
  6. By: Sokolov, D.; Zavyalova, E.
    Abstract: Human resource management in professional service firms is one of the most important instruments for promoting sustainable competitive advantage. However, the questions of what HRM-related challenges such firms face and how they utilize HRM practices in order to address these challenges are not fully answered. Using a systematic literature review of 79 peer-reviewed journals, we attempt to contribute to answering to these questions. We analyzed the contribution of the articles by four HRM issues in PSF: "herding cats" problem, multiple commitment, autonomy and informality, and alternative incentives. As result, we identified possible gaps in the literature that could serve as the directions for future research.
    Keywords: human resource management, HRM, professional service firms, systematic literature review,
    Date: 2017
  7. By: Dolores Añón Higón (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Mañez (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Amparo Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Juan A. Sanchis-Llopis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: In this article we characterize Total Factor Productivity (TFP) frontier firms at the industry level within the European Union during the period 2003-2014, and explore the determinants of the firms’ distance to the frontier. We find that larger, more capital-intensive, and more labour skilled firms are closer to the productivity frontier. In contrast, older firms are further away from the frontier. In addition, we obtain that a number of countries' economic and institutional factors, such as tertiary education, trade openness, easiness in getting credit and governance quality, all positively affect the catching up of laggards towards the productivity frontier. We also examine the moderating effect of the Great Recession on these determinants and obtain differentiated patterns.
    Keywords: TFP, frontier firms, laggard firms, Great Recession, European Union countries
    JEL: F43 O47 O52
    Date: 2017–07
  8. By: Matthias Kehrig; Nicolas Vincent
    Abstract: The aggregate labor share in U.S. manufacturing declined dramatically over the last three decades: Since the mid-1980’s, the compensation for labor declined from 67% to 47% of value added which is unseen in any other sector of the U.S. economy. The labor share of the typical U.S. manufacturing plants, in contrast, rose by over 5 percentage points. We reconcile these two facts by documenting (1) an important reallocation of production towards “hyper-productive plants†and (2) a downward adjustment of the labor share of those same plants over time. These two related forces account for almost all the change in the trend of aggregate labor share in the manufacturing sector, with only a small role for exit of high-labor-share plants. Relative to their peers, plants that account for the majority of production by the late 2000's arrive at a low labor share by gradually increasing value added by a factor of three while keeping employment and compensation unchanged.
    Keywords: labor share, productivity, firm size distribution, organization of markets
    JEL: E20 L10 L20 L60 O40
    Date: 2017
  9. By: Jean-Philippe Boussemart (University of Lille 3 and IESEG School of Management (LEM 9221-CNRS)); Hervé Leleu (CNRS-LEM 9221 and IESEG School of Management); Edward Mensah (University of Illinois at Chicago and IÉSEG School of Management); Karina Shitikova (IÉSEG School of Management (LEM-CNRS 9221))
    Abstract: Using a non-parametric programming framework, we analyze input-output ratio convergence and technical efficiency catching-up among 63 North American industries over the period 1987-2014. We first separate efficiency gaps into two components: a technical efficiency effect taking into account industry size heterogeneity and a structural component which highlights the impacts of an input-output deepening or expanding effect on technological transfer over time. Secondly, a panel data analysis is performed to link input and output price evolutions with changes in technical efficiencies and input-output mixes. Results clearly show that convergence is observed for both technical and structural components. The impact of these convergence processes on the US economy is estimated at around 0.64% of additional growth. Moreover, these two convergence processes have positive influence onto final demand prices and profitability but negative impact onto suppliers’ prices while no effect can be established on employees or capital providers’ remunerations.
    Date: 2017–09
  10. By: Pilar Beneito (Department of Economic Analysis, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); María E. Rochina-Barrachina (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).); Amparo Sanchis (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    Abstract: This paper analyses the determinants of firms’ decisions to patent abroad. We use dataspanning 2005-2013 of Spanish firms from PITEC, a panel database carried out by theINE (The National Statistics Institute). We focus on patenting firms and consider thatfirms’ decisions to apply for patents in foreign patent offices may be driven by twokinds of motivations: first, to exploit the patent in international markets where there ispotential demand for the invention and, second, to protect the invention abroad whenthe quality of the invention is high enough. In the first case we refer to market-drivendeterminants and, in the second case, to innovation type-driven determinants. Weempirically analyse these factors using information on firms’ sales in differentgeographic international markets, and also indicators of the quality and scope of theinnovations. We distinguish among EPO, USPTO and PTC patents, and estimate, first,a multivariate probit model to determine the factors underlying the decision to apply forpatents in these foreign offices. Second, we estimate a multivariate model to explain theshares of patent applications in each one of the offices.
    Keywords: international patenting, innovative firms, multivariate probit
    Date: 2017–08

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